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Cathay Pacific share price at five-month high despite fewer passengers

Hong Kong airline Cathay Pacific share price is trading at a five-month peak of HK$11.22 per share.

At least three senior staff members at Cathay Pacific Airways Limited would be leaving the airline, just one day after it revealed that inbound passenger traffic for the month of November was down 46% year-on-year.

On Wednesday, 19 December, the South China Morning Post reported that two general managers and the lead of a business support unit have resigned.

Prior to that, the Hong Kong carrier said on 18 December its international arm Cathay Pacific and regional segment Cathay Dragon carried a combined total of 2,623,764 passengers in November 2019, a drop of nine percent compared to the same month last year.

Impact on share price

Despite the negative updates, Cathay Pacific’s share price has increased over four percent since Monday. It is currently trading at a five-month high of HK$11.22 per share as of Wednesday 12PM, based on IG data.

This is the sixth straight session that share price has gained, increasing over 10% during this time period.

Across the year, stock value is down 19.2% from the 52-week high price of HK$14.14 achieved in April, just one month before political protests started.

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Share price outlook for the rest of 2019

Analysts polled by Bloomberg say share price could rise an additional four percent above HK$11.60 in the next 12 months. Eleven of them rated the stock a ‘buy’, six on ‘hold’, and two on ‘sell’.

Overall operationally, Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam, expects the rest of 2019 to ‘remain incredibly challenging’ and for ‘second-half financial results to be significantly below those of our first half’.

He added: ‘Looking forward, we continue to see a significant shortfall in inbound Hong Kong advance bookings, particularly from mainland China and other regional markets, as compared to the same snapshot last year. This shortfall has been partially offset by the improvement of transit passenger traffic.’

This also follows CEO Augustus Tang Kin-Wing’s statement last month that the company will undertake cost control measures and reduce flight capacity in 2020.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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